• Upgraded rating comes with stable outlook, Fitch says
  • Junk rating improves on leaner deficit, stronger recovery

Serbia’s credit rating was raised by Fitch Ratings after Prime Minister Aleksandar Vucic, who has pledged to cut public jobs and close money-losing state companies, won April early elections and prepares to form a new coalition government.

Fitch raised the Balkan nation’s credit rating to BB-, three steps below investment grade and on par with Nigeria, Vietnam, Bangladesh and Georgia. The outlook is stable. Serbia is rated B1 at Moody’s Investors Service and BB- by Standard & Poor’s.

“Fiscal trends in the first few months of 2016 have been positive, and we now expect a general government deficit this year of 3.3 percent of GDP, compared with 4 percent previously,” Fitch said in a statement Friday. “Fiscal consolidation and moderate real GDP growth rates will continue in the coming years, keeping the fiscal deficit at around 3 percent of GDP from 2017 and putting the government debt to GDP ratio on a downward path.”

Fitch lowered Serbia’s credit rating in 2014 when the Balkan nation’s public finances deteriorated and its fiscal gap expanded to around 7 percent of gross domestic product.

The economy of the biggest former Yugoslav republic, which Vucic is trying to make ready to join the European Union by 2020, grew 3.5 percent from January to March from a year earlier. The government forecasts full year growth of 2.5 percent, eclipsing the 0.8 percent expansion from 2015.

Vucic, who’s in talks to form a cabinet after winning his second snap election in two years, is expected to cut jobs in the public sector and close or sell unprofitable companies to complete structural reforms agreed under a 1.2 billion euro ($1.35 billion) program with the International Monetary Fund. The measures should help halt a further increase in public debt, which the IMF sees topping 80 percent of GDP this year.

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